Zack Aldridge
Cost Accounting
May 2015
FinePrint Company

In this scenario, you have John Johnson. Johnson is the owner of a well-known high quality printing company in Central Virginia. Johnson performs most of his business around the central Virginia area but will occasionally expand outside of that area to do some business.

John Johnson has recently been faced with two offers. The first offer was one made by a friend of his, who owns a small printing company, which is also in Virginia. She had called Johnson to see if he could do a special printing job for her. The second offer he had was from another small time printing business owner who offered to Johnson to help work for FinePrint for pretty cheap. Johnson’s friend, Abbie Jenkins, wanted to work a deal with Johnson where she would pay him 10 dollars for every 100 brochures he printed for her. From the moment he got that offer, he knew that was pretty low but told Abbie he would consider. In the second offer, Ernst had offered to help Johnson out by printing brochures for a low price. The offer of 8 dollars for every 100 brochures didn’t sound too bad to Johnson.

After a first glance at both if the offers, it would seem to me that the second offer would be the best option. Even Johnson initially even thought that sounded like a more attractive option. After the calculations, it is figured to be that accepting the first offer on the special order would be the more attractive option. The net income to be received if Johnson accepts the first option would come out to $2,750. The calculations for the second option of outsourcing brochures to another company result in a net income of $1,800.

Initially it seemed as if the outsourcing would’ve been the better option. After all that was not the case. When faced with options like these, every advantage/disadvantage must be taken into consideration. The result in the case was the special order job being the best short-term solution.